New Zealand Drops Excise Tax by 50% on Heated Tobacco

New Zealand’s Associate Health Minister Casey Costello has cut the excise tax on Heated Tobacco Products (HTPs) as she aims to make them more attractive as an alternative to smoking.

Costello, also the Customs Minister, has cut the excise rate on HTPs by 50 percent effective 1 July—a move silently dropped on the Customs website, media reports claim.

Costello refused to be interviewed, but a spokesman said she had reduced the cost of the products to encourage smokers to switch to safer alternatives.

But Janet Hoek, a Professor of Public Health at the University of Otago, said the move seemed weighted in favor of the tobacco industry.

“Certainly that is something that tobacco companies would have been keen to see happen,” Hoek said. “This is not advice that is coming from the Ministry (of Health). It certainly seems to be advice that is suiting tobacco industry interests.”

Tobacco giant Philip Morris owns a leading brand in the HTP market, the IQOS, where sticks of tobacco are inserted into a device and heated, rather than burned.

Philip Morris has lobbied for a cut to the excise tax on HTPs, telling the Tax Working Group in 2018 that the government should “establish a tax rate for heated tobacco products significantly below the tax rate” for tobacco.

In a statement to media, Costello said that vaping had been a successful quit-smoking tool, and she wanted to see whether HTPs would also be a useful cessation device.

“Vaping does not work for everyone and some attempting to quit have tried several times. HTPs have a similar risk profile to vapes and they are currently legally available, so we are testing what impact halving excise on those products makes.”